What are the rules of a 1031 exchange?
Description: A brief overview of the main rules of a 1031 exchange
Can and should the tax code but I break it down to 4 Easy Rules
#1 all cash proceeds from the sale of the relinquished property must be re-invested in the preplacement property. You can keep some of those funds but you will pay tax on what you choose to keep from the sale…
#2 the purchase price of the replacement property must be at least as much of the sales price of the relinquished property or you would pay the tax on the difference
#3 the purchaser of the replacement property must be the same as the seller of the relinquished property or be a disregarded entity. …Basically that means if you own your property as an in
#4 For safe harbor protection , the exchange money must be held by a qualified intermediately, basically the safe harbor allow the money to be held in escrow to deploy it and you never touch the money to protect you from paying taxes on it. Typically the intermediary should charge between $500 to 1000 to do that.